As a first time home buyer, you and your spouse are searching a home in Orange County, including City of Irvine. You are looking for 3 bed room and 2 bath condo or townhouse, between 1,500 to 1,800 square feet, 2 car garages, built after year 2004, in a nice location, close to restaurants, grocery shopping, and easy access to freeway. You and your spouse both works and combined salary is $120,000 per year. Your credit score is 760, and your spouse credit score is 740. You have monthly student loan payment of $200 per month with three (3) years to pay off the student loan. Car payment total $250 per month with three years remaining. You really wants to replace your 2004 Honda Civic, which has been paid off, with a newer car which will cost approximately $300 per month for 5 years, plus additional down payment of $5,000 after trade-in the 2004 Honda Civic. You have saved up $150,000 in saving account. You plan to use up to $120,000 for down payment of this home. You plan to stay in this home for at least 5 years and possible move to a larger home if your future income could afford the price.
The condominium is worth $539,000. 3 beds and 2 baths. 1547 sq ft. $348.42/sqft. 435 W Center Street Promenade #324 Anaheim, CA 92805.
If you insist to buy the new car with additional $300 car payment per month, can you get pre-approve your home purchase? If yes. Up to what amount can you get finance for this purchase?
In support of your conclusion in 1 above, what debt to Income ratio do you use to qualify your home loan? Calculate both front end and back end ratio for you and your spouse. What is the maximum loan amount you can qualify them?
What if the purchase price changes upward? With maximum down payment at $120,000, & the best rate you can find do not change, then illustrate the impact of increase purchase price on the loan amount, mortgage payment & on the front end and back end ratio? Can you afford to increase the purchase price?
Would you choose not to purchase of new car with monthly payment of $300, prior to buying your home? Explain Why?
Which lender provides the best 30 years FIXED rate mortgage, lowest closing cost in your search? In support of answer, compare by at least three lenders, (a) the fixed rate mortgage terms, (b) APR, (c) closing cost?
Which lender provides the best ARM terms. In support of answer, compare at least three lenders, (a) the ARM rate mortgage terms, (b) APR, (c) closing cost?
What advice do you have for you and your spouse? (1) Buy now at most You can afford or (2) defer the purchase till You make more income? Explain Why?